Hargreaves Lansdown - High Charges Warning

Rollinghome

dunstonh wrote: »

Its a good job I am fee based then and still trot it out.

Good for you, I keep forgetting. Then we'll try to disregard all your earlier posts about the commission you keep.

dunstonh wrote: »

Feel free to check the others.

As you seem to have gathered all the figures I assumed you would want to do that. You do know what each of those funds is tracking I assume?

Or did you ignore the figures for the FTSE All-share trackers for some reason?


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dunstonh

Good for you, I keep forgetting. Then we'll try to disregard all your earlier posts about the commission you keep.

You choose to forget as you dont like facts. You like making things up and pretend they are facts.

as you seem to have gathered all the figures I assumed you would want to do that. You do know what each of those funds is tracking I assume?

Why dont you do it. It will be nice to see something factual from you for once.

Rollinghome

dunstonh wrote: »

You choose to forget as you dont like facts. You like making things up and pretend they are facts.

Why dont you do it. It will be nice to see something factual from you for once.

OK, let's all pretend you're a fee-based adviser now.

nattynick

Rollinghome wrote: »

Good for you, I keep forgetting. Then we'll try to disregard all your earlier posts about the commission you keep.

As you seem to have gathered all the figures I assumed you would want to do that. You do know what each of those funds is tracking I assume?

Or did you ignore the figures for the FTSE All-share trackers for some reason?

seems like he's using typical salesman's tactics to me, selective use of the facts.

jamesd

Rollinghome, dunstonh's firm offers the best mix available to a consumer buying products: fee, commission, commission reducing fee and probably every other permutation available that would reduce the cost for the buyer.

You should read this story in the New York Times when it comes to taxes on US funds:

"Expenses were the culprit. For both the actively managed fund and the hedge fund, those expenses more than ate up the large amounts — 3.5 and 9 percentage points a year, respectively — by which they beat the index fund before expenses."

'What if you’re investing in a tax-sheltered account, like a 401(k) or an I.R.A.? In that case, Mr. Kritzman conceded, the odds are relatively more favorable for active management, because, in his simulations, taxes accounted for about two-thirds of the expenses of the actively managed mutual fund and nearly half of the hedge fund’s. But he emphasized the word "relatively." "Even in a tax-sheltered account,” he said, “the odds of beating the index fund are still quite poor."'

"he assumed that long-term capital gains were subject to a 15 percent federal tax and a 6.85 percent state tax; short-term capital gains and dividends were taxed at a combined federal and state rate of nearly 42 percent. The index fund’s average after-expense return was 8.5 percent a year, versus 8 percent for the actively managed fund and 7.7 percent for the hedge fund."

In the UK short term capital gains and dividends within a fund are not taxed at 42% compared to 21.85% for longer term gains. In the US the effect of this tax difference is to impose a significant tax penalty on funds that are more active. Enough to get rid of the outperformance that their active management generates.

That's why the tax difference is a key driver for the popularity of ETFs and simple trackers in the US: the US tax system strongly favors them. For the same reason it favors simple buy and long term hold strategies for shares. And for exactly the same reason it's misleading to consider the US example for UK funds because they aren't taxed in such a punitive way for holding times of under a year.

It's not solely IFA's who need to be aware of the US tax differences that inject a large bias into US studies that favors passive investments, it's every investor who reads US-oriented research and needs to try to work out how applicable it is to the UK. The huge tax difference in the US means not very in many cases and swamps the small difference in fees charged by the fund management companies.

sabretoothtigger

Is a sipp more expensive to run then an isa. I noticed they dont discount annual charges for funds in a sipp but they do for an isa.

Seems one way or another they have to cover their expenses, it will be much clearer when its out in the open I guess and there is much distrust of the system it would seem

Ironically Im not sure if small investors might be better off now. Annual fees for these accounts might cost them more


To the OP you might want to consider holding a tracker outside of the ISA if you arent going to pay capital gains tax

gilt

I wonder if someone could explain to me why US ETFs for the home market charge down to 0.12% , while ishares in the UK charge 0.4%? Is it just another example of rip off Britain, or am I missing something?

jamesd

gilt, it's a smaller market so fixed costs like regulatory compliance would have a greater effect.

dunstonh

The FSA is a money magnet. Its estimated that up to a third of income by regulated financial services firms goes on compliance.

martinfollower_2

Using my best timing skills, I chose to put money into the Fidelity Moneybuilder through H&L, and then ten minutes later read this thread.... D'oh:o

The TER quoted is 0.27% for both Fidelity Money builder and the HSBC FTSE All Share Index, yet the HSBC tracker has no small print extra fees...

A stupid question but how much difference would this make per £1000 invested?

I get that 0.1% charge to 0.575% charge is a big increase, but if managed fund charges are around 1.68% (Invesco Perp High Income), it si still significantly cheaper right? Although the tracker is not going to perform as well as the managed fund claims it will...

Help!!